Average Tax Rate for Richest 2% Drops to 5-Year Low; Richest 3% Still Pay Half of Federal Income Tax Collected

If your income is in the top 2% in the country, you’re doing pretty well. And as a bonus, according to the Internal Revenue Service (IRS), your tax rate is the lowest it has been in a while.

The IRS has published (pdf) figures from the 2012 tax year showing that those who are among the top 2% in adjusted gross income (AGI) made at least $286,000 and their effective federal tax rate had fallen to a five-year low of 22.52%, the lowest it had been since 2007.

If you’re in the top 3% of AGI, you made at least $228,000 in 2012 and you paid more than half the income tax collected by the IRS in 2012. Those at that level kicked in 51.7% of the tax paid that year.

In general, the U.S. income tax system is progressive: that is, the more you make, the greater percentage you pay. When it comes to the super-rich however, that’s not true. Those 1,360 who made more than $62 million in a year paid a smaller tax rate than those who make $13 million. According to Alan Pyke of ThinkProgress, the reason for that is capital gains tax. Selling an asset that has appreciated, such as stock or real property, is taxed at a lower rate than income. Income is taxed at a maximum rate of 39.6%, plus payroll taxes, while capital gains are taxed at only 23.8%.

Those super-rich, the 0.001% who have more than $62 million in AGI, paid 3.3% of all the income tax collected. Their average tax rate was 17.6%, according to Bloomberg.